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2019 (10) TMI 310 - DELHI HIGH COURTIncome accrued in India - Maintainability of the present writ petition on the ground of alternative efficacious remedy being available under the scheme of the Act - directions issued by the first Respondent - DRP under Section 144C(5) - receipts on account of domain name registration charges as royalty under Section 9(1)(vi) - India-UAE DTAA - HELD THAT:- Pertinently, the alternate efficacious remedy that has been cited by the revenue is by way of an appeal before ITAT, which is not available as yet, because no assessment order has yet been passed by the Assessing officer. The only submission of the Petitioner is that the DRP has not even taken into consideration Petitioner’s plea that it is a tax resident of UAE, and under the India – UAE DTAA, the Assessing Officer could not have proposed to treat the income from domain name Registration as Royalty. If this plea of the Petitioner is not even looked at/ examined by the DRP, it would tantamount to a jurisdictional error. To relegate the Petitioner to the appellate remedies, where he would have to join the queue, in order to obtain an order of remand to DRP, would be unjustified. Significantly, no prejudice would be caused to the Revenue, as the Petitioner is only seeking correction of a jurisdictional error. Thus, if the Petitioner was to succeed in the present petition, it would only result in an order remitting the matter to DRP to decide afresh; in which eventuality, DRP would be entitled to deal with the objections in accordance with law. Whether the writ petition raises an issue that would invite the exercise of jurisdiction by the Court at this stage? - HELD THAT:- The DRP has, instead, blindly followed the decision of GoDaddy.com LLC [2018 (4) TMI 390 - ITAT DELHI] and [2018 (7) TMI 1809 - ITAT DELHI] and held that the Web Hosting Services are interlinked with domain registration and are ancillary and subsidiary to the application or enjoyment of the right for which payment is received as royalty. Since the payment so received is considered as royalty, the payments received for “Web Hosting Services” are also considered as Royalty under Section 9(1)(vi) of the Income Tax Act, 1961. It is starkly noticeable that the main contention, or to say the basic argument, raised by the Petitioner with respect to the non-taxability of its income under India-UAE DTAA has not been noticed or discuss, much less adjudicated upon. he case of the Petitioner is essentially that the definition of Royalty under the Act is wider than that provided in the Treaty. Petitioner’s contention is that under the Act “transfer of rights in property similar to trademark” is also covered, whereas under the Treaty, only the “transfer of right to use trademark” is covered and not “similar rights or rights in property similar to trademark”. This Court, at this stage, is not expressing any view on the merits of the aforesaid objection as it is for Respondent No. 1 to consider, evaluate and analyse the same, while exercising the power under Section 144C of the Act. Writ petition is allowed and the impugned order is set aside. Consequently, the matter is remitted back to the first respondent for considering the objections raised by the petitioner in detail, and for passing a fresh order on merits and in accordance with law by giving reasons and findings. It is made clear, once again that this Court is not expressing any view on the merits of the claim/objections made by the Petitioner, or the findings rendered by the Transfer Pricing Officer, as it is for the first respondent to consider and decide these aspects.
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